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UN predicts 3 percent global economic growth

UN predicts 3 percent global economic growth

The United Nations said Wednesday the global economy is rebounding from the worst financial crisis since World War II and predicted world economic growth of 3 percent in 2010 and 3.2 percent in 2011.
The revised prediction is an improvement from the U.N.'s forecast of 2.4 percent growth in the global economy in 2010.
"The good news is the crisis in the real economy has abated and we see continued recovery, but at the same time it's weak and uneven," leading U.N. economic expert Rob Vos said. "The bad news is there's continued downside risks to this outlook which may lead us to mediocre gross (economic) prospects for the coming year."
The U.N.'s updated 2010 World Economic Situation and Prospects report said that following a 2 percent contraction in 2009, global economies are rebounding, propelled by government fiscal stimulus packages and expansionary monetary policies. But the U.N. emphasized that the recovery is still too weak to restore job losses and close the gap in output left by the deep recession.
Despite the financial turmoil in equity markets in recent weeks and months, Vos added, risk premiums in most credit markets have dropped to pre-crisis levels "meaning that there's more confidence in financial markets," and there's been a resurgence of private capital flowing to emerging market economies.
On the negative side, Vos cautioned that the economic recovery is still heavily dependent on fiscal and monetary stimulus and companies restocking inventories, that credit supplies are still "very subdued," and that public finances have deteriorated because tax revenues are down and stimulus packages are increasing debt.
He said the revised forecasts assume that fiscal stimulus measures will stay in place this year and start fading out in many countries next year.
In the United States, the world's largest economy, the report predicts 2.9 percent growth in 2010 slowing to 2.5 percent in 2011. It forecasts just 1.3 percent growth for both years in Japan, and 0.9 percent in 2010 and 1.5 percent in 2011 for European Union countries in the beleaguered euro zone.
China and India are leading the way to economic recovery, with positive spillover to other developing countries, the report said.
It forecasts 9.2 percent economic growth in China this year and 8.8. percent next year, and 7.9 percent in India this year and 8.1 percent next year.
Vos, director of development policy analysis in the U.N.'s Department of Economic and Social Affairs, said that by contrast "growth still remains below potential in Latin America, Africa and west Asia," while the recovery in transitional economies in southeast Europe and the former Soviet bloc is "very fragile ... from very steep declines."
Africa's growth is forecast to remain below pre-crisis levels but should accelerate from 2.4 percent in 2009 to 4.7 percent in 2010 and 5.3 percent in 2011. Economic growth in Latin America and the Caribbean has also recovered more strongly that previously expected and is expected to reach 4 percent in 2010 and 3.9 percent in 2011, the report said.


Updated : 2020-12-02 16:07 GMT+08:00